Legal marketing business First4Lawyers is to create an alternative business structure (ABS) to handle road traffic accident (RTA) claims after the whiplash reforms are introduced in May.
The claims management company, one of the few nationally recognised legal brands, is launching First4InjuryClaims while pledging to its panel firms that it will not expand the firm’s injury work beyond RTAs.
However, in time it could look at similar, fully digitally enabled, high-volume, low-margin work in non-injury areas of legal practice.
It said only a minority (up to 10,000 a year) of enquiries received by First4Lawyers relate to RTAs and these will all now be handled by the law firm, even if they turn out to be worth more than the new small claims limit of £5,000.
This was because of the difficulty of picking out many higher-value claims at an early stage.
First4Lawyers’ marketing efforts will be focused on maximising enquiries across medical negligence, and employer’s, public and occupier’s liability claims “for the sole benefit” of its panel member firms.
The ABS is a start-up that should be ready to begin work in early summer, subject to Solicitors Regulation Authority approval. It will be a separate company within the group, with its own management and operations team.
PI operations specialist Tony Walker has been working with First4Lawyers to advise on its post-reform business strategy. To build the business, the company has hired Lee Hamilton from National Accident Law – the law firm owned by rival marketing business National Accident Helpline – where he held positions as head of portal and senior technical manager.
The ABS will initially have up to 12 staff in the company’s Huddersfield head office.
Managing director Qamar Anwar explained that the difficulties with navigating the new online litigant in person portal, as well as the experience of financial mis-selling claims, indicated that many injured people would likely still want help.
But with compensation slashed under the reforms, the margins would be too small for law firms to carry on in the field unless they could handle huge volumes – and insufficient profit to share with a third party referring claims.
“Some of our member firms have told us they are leaving RTA altogether, while others may offer a limited service, assisting claimants through the portal for a small fixed fee, but without offering advice and guidance. A number have still to decide.
“But one thing we know for sure is that post-reform RTA work will offer limited revenue opportunities and very small margins.
“It is important to First4Lawyers’ brand promise to continue offering consumers support and we have concluded that setting up our own law firm, keeping the costs and profits within the same group, is the only feasible way to do this.”
He said that, although the company would not be advertising for them specifically, First4Lawyers’ market presence and marketing around generic injury search terms – such as ‘no win, no fee’ – meant it would continue to receive RTA enquiries.
“We have never wanted to set up a law firm, but First4InjuryClaims has been born out of necessity. It ensures we are in the best possible position to utilise the First4Lawyers brand for the benefit of our panel firms, who remain at the heart of our business strategy.”